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An empirical derivation of the industry wage equation

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  • Mason, Patrick L.

Abstract

This paper utilizes the Box-Cox transformation of variables technique to empirically derive an industry wage equation. Section I presents the determinants of potential wage differentials between and within industries. Section II estimates a Box-Cox industry wage equation. Likelihood ratio tests on alternative specifications of this equation affirm that competitive structure is a significant determinant of the industry wage rate and that human capital specifications of the industry wage equation (for the manufacturing sector) are not statistically valid. Section III summarizes the results.

Suggested Citation

  • Mason, Patrick L., 1994. "An empirical derivation of the industry wage equation," MPRA Paper 11325, University Library of Munich, Germany.
    • Handle: RePEc:pra:mprapa:11325
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    File URL: https://mpra.ub.uni-muenchen.de/11325/1/MPRA_paper_11325.pdf
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    References listed on IDEAS

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    1. Seaks, Terry G & Layson, Stephen K, 1983. "Box-Cox Estimation with Standard Econometric Problems," The Review of Economics and Statistics, MIT Press, vol. 65(1), pages 160-164, February.
    2. Hardle, Wolfgang & Linton, Oliver, 1986. "Applied nonparametric methods," Handbook of Econometrics, in: R. F. Engle & D. McFadden (ed.), Handbook of Econometrics, edition 1, volume 4, chapter 38, pages 2295-2339, Elsevier.
    3. Gunderson, Morley, 1989. "Male-Female Wage Differentials and Policy Responses," Journal of Economic Literature, American Economic Association, vol. 27(1), pages 46-72, March.
    4. Spitzer, John J, 1982. "A Primer on Box-Cox Estimation," The Review of Economics and Statistics, MIT Press, vol. 64(2), pages 307-313, May.
    5. Pearce, James E, 1990. "Tenure, Unions, and the Relationship between Employer Size and Wages," Journal of Labor Economics, University of Chicago Press, vol. 8(2), pages 251-269, April.
    6. Erica L. Groshen, 1988. "Why do wages vary among employers?," Economic Review, Federal Reserve Bank of Cleveland, vol. 24(Q I), pages 19-38.
    7. Mason, Patrick L, 1995. "Race, Competition and Differential Wages," Cambridge Journal of Economics, Cambridge Political Economy Society, vol. 19(4), pages 545-567, August.
    8. William T. Dickens & Lawrence F. Katz, 1986. "Interindustry Wage Differences and Industry Characteristics," NBER Working Papers 2014, National Bureau of Economic Research, Inc.
    9. Hardle, Wolfgang & Linton, Oliver, 1986. "Applied nonparametric methods," Handbook of Econometrics, in: R. F. Engle & D. McFadden (ed.), Handbook of Econometrics, edition 1, volume 4, chapter 38, pages 2295-2339, Elsevier.
    10. Lawrence F. Katz & Lawrence H. Summers, 1989. "Industry Rents: Evidence and Implications," Brookings Papers on Economic Activity, Economic Studies Program, The Brookings Institution, vol. 20(1989 Micr), pages 209-290.
    11. Charles Brown, 1980. "Equalizing Differences in the Labor Market," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 94(1), pages 113-134.
    12. White, Halbert & Olson, Lawrence, 1981. "Conditional distributions of earnings, wages and hours for blacks and whites," Journal of Econometrics, Elsevier, vol. 17(3), pages 263-285, December.
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    Cited by:

    1. Lefteris Tsoulfidis & Persefoni Tsaliki, 2011. "Classical Competition and Regulating Capital: Theory and Empirical Evidence," Discussion Paper Series 2011_02, Department of Economics, University of Macedonia, revised Feb 2011.
    2. G. Coleman, 2002. "Contesting the Magic of the Market-place: Black Employment and Business Concentration in the Urban Context," Urban Studies, Urban Studies Journal Limited, vol. 39(10), pages 1793-1818, September.
    3. Eva Katalin Polgar & Julia Woerz, 2011. "Trade With Central and Eastern Europe: Is It Really a Threat to Wages in the West?," DANUBE: Law and Economics Review, European Association Comenius - EACO, issue 1, pages 1-31, March.
    4. repec:onb:oenbwp:y:2009:i:1:b:1 is not listed on IDEAS

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    More about this item

    Keywords

    Box-Cox; functional form; wage equation; labor market inequality; efficiency wage;
    All these keywords.

    JEL classification:

    • J31 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Wage Level and Structure; Wage Differentials
    • C52 - Mathematical and Quantitative Methods - - Econometric Modeling - - - Model Evaluation, Validation, and Selection
    • L20 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - General

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